Personal Tax: Changes that may effect you

June 16, 2016

There have been a number of tax-related changes in the recent 2016 federal budget—here are a few:

• Canada Child Benefit (CCB): Beginning July of 2016, the nontaxable CCB replaces the Canada Child Tax Benefit (CCTB) and Universal Child Care Benefit (UCCB). It provides monthly financial assistance to families with children under the age of 18 to a maximum benefit of $6,400 for each child under the age of 6 and $5,400 for children aged 6 to 17 (less according to the adjusted family net income).

• Family Tax Cut Credit: The budget proposes to eliminate this credit, currently allowing a higher-income earning spouse (or common-law partner) to notionally transfer up to $50,000 of taxable income to their spouse or common-law partner in order to reduce the couple’s combined tax liability to a maximum of $2,000.

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• Children’s Fitness and Arts Tax Credits: It is proposed to half the maximum eligible expenditures on which this 15% refundable credit can be claimed for 2016 (i.e., from $1,000 to $500 for fitness, and from $500 to $250 for arts); eliminating it entirely in 2017.

• Education and Textbook Tax Credit: It is proposed by January 1, 2017, to eliminate this 15% non-refundable credit. However, unused education and textbook credits can be carried forward from prior to 2017, to be claimed in 2017 and subsequent years.

• Teacher and Early Childhood Educator School Supply Tax Credit: This new credit provides a 15% refundable credit based on the amount of expenditures, up to a maximum of $1,000, made for eligible supplies purchased on or after January 1, 2016. It’s available to eligible educators who are teachers or early childhood educators that hold a valid certificate recognized by the province or territory in which they are employed.

• Personal Tax Rates: The personal income tax rate in the second bracket is reduced from 22 percent to 20.5 percent for 2016 onwards, while a new top tax bracket of 33 percent applies to taxable income over $200,000, with amendments, including the new 33 percent top marginal personal tax rate that will apply to excess employee profit-sharing plan contributions.

Source: Federal Budget 2016 URL: http://www.budget.gc.ca/2016/docs/plan/budget2016-en.pdf

 

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